French supplier association, FIEV, says PSA Peugeot Citroen has no other solution than to implement its controversial plan to cut thousands of staff and close its factory near Paris.

PSA is looking to axe up to 8,000 jobs and shut its Aulnay site near the French capital in a bid to address over-capacity amid the enduring European economic recession, but its intentions have attracted deep criticism from unions as well as French President, Francois Hollande.

“The PSA situation is quite serious and we do not see any other solution,” FIEV president, Claude Cham, told just-auto. “If they do not do that they will perhaps be in an extremely difficult situation.

Cham added he agreed with the recent report commissioned by French Economics Redevelopment Minister, Arnaud Montebourg, that saw industry expert, Emmanuel Sartorius, point out the “chronic under-utilisation” of PSA plants.

“We are totally in agreement with this report,” said Cham. “I don’t think PSA can wait more than one year.

“PSA has to introduce some changes, many coming inside the company.”

Cham also reiterated FIEV’s position expressed at the recent Paris motor show, that any return to scrappage schemes, already planned by the Spanish government, was not in France’s interest, but applauded the decision to set up a new investment bank.

The Banque Publique d’Investissement (BPI) will have access to a total of EUR35bn (US$46bn), although it is not clear how much of this is new finance or is an amalgamation of several existing banking options into one.

Despite the FIEV president noting he was “quite anxious” about the state of the French automotive industry, he nevertheless highlighted the success of some notable Tier 1 suppliers.

“Why is Faurecia already supplying the A8, why [is] Valeo [supplying] BMW, Toyota and so on?” he said. “That means France has an intellectual ability and technology.

“We have to strengthen global co-operation with [the] French car industry in order to be in a position to defend our position in our territory and outside our territory.”